Upcoming Tax Treaty Changes: Applicable From 1 January 2024
Azerbaijan/Japan
The new treaty between the Republic of Azerbaijan and Japan entered into force on 4 August 2023, and applies as from 1 January 2024. The existing dividend treaty rate of 15% withholding will be reduced to 7%. The corporate and government interest treaty rate of 10% will also be reduced to 7%, although the interest will be exempted if the beneficial owner is a central bank or government.
Cyprus/Netherlands
The new treaty between Cyprus and the Netherlands will enter into force and apply from 1 January 2024. The current tax rate of 15% withholding on dividends remains unchanged; however, a rate of 0% will apply to dividends if the beneficial owner is:
a company that holds directly at least 5% of the capital of the company paying the dividends, throughout a 365-day period that includes the day of the payment; or
a recognised pension fund which is generally exempt under the corporate income tax law of Cyprus
Georgia/Poland
The new income tax treaty between Georgia and Poland was signed on 7 July 2021 and will be applicable from 1 January 2024. Once in force and effective, the new treaty will replace the 1999 tax treaty between the two countries. The existing dividend and interest treaty rate of 10% withholding will reduce to 5% with an exemption for interest derived and beneficially owned by the government of a contracting state.
Malaysia/Poland
The new income tax treaty between Malaysia and Poland entered into force on 12 January 2023 and applies from 1 January 2024. The treaty replaces the 1977 tax treaty between the two countries. The existing dividend treaty rate of 0% withholding will increase to 5%, and the treaty rate for interest of 15% will reduce to 10%.
Germany/Mexico
The 2021 protocol to the 2008 tax treaty between Germany and Mexico entered into force on 6 August 2023 and will enter effect from 1 January 2024. Once effective, dividends paid to a company (other than a partnership) that holds at least 10% of the capital of the payer company directly throughout a 365-day period that includes the date of the payment of the dividends (see Footnote below), a 5% withholding tax rate will be applicable thanks to the amended treaty. Apart from that, the rate will be 15%. Special rules may apply to income derived from rights or claims to participate in profits, so the dividends article of the German treaties my need to be consulted in some instances.
The protocol does not affect withholding tax rates for interest.
Armenia/Switzerland
The 2021 protocol to the 2006 treaty between Armenia and Switzerland entered into force on 2 May 2023 and will be applicable beginning 1 January 2024. Once in effect, a 0% withholding tax rate will be provided on dividends paid to a company that:
holds directly at least 50% of the capital of the payer company during a 365-day period that includes the date of payment of the dividends (see Footnote below); and
has invested over CHF 2 million, or the equivalent amount in another currency, in the capital of the payer company as of the date the dividends are paid.
In addition, a 5% rate will be applicable to dividends paid to a company that:
holds directly at least 10% of the capital of the payer company during a 365-day period that includes the date of payment of the dividends (see Footnote below); and
has invested over CHF 100,000, or the equivalent amount in another currency, in the capital of the payer company as of the date the dividends are paid.
In other cases, a rate of 15% withholding will be applicable.
The protocol does not affect withholding tax rates for interest.
Uruguay/Brazil
The income and capital tax treaty between Uruguay and Brazil entered into force on 21 July 2023 and applies to income from 1 January 2024. The treaty, signed 7 June 2019, is the first of its kind between the two countries. The dividend treaty rate will be 15% withholding with the exception that if the beneficial owner is a company that has held at least 25% of the paying company's capital for at least 365 days prior to the date of payment the treaty rate will be 10%. The withholding tax rate for interest will be 15% except for interest paid to governments where it will be exempted.
Nothing on this page is intended to constitute financial, legal, or tax advice.
Footnote: When determining the period, changes in ownership directly resulting from a corporate reorganization of the company that holds the shares or the payer company will not be taken into account.